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to deduct the IRS education expenses First of all, you need to know what you can include in your declaration. Then, it must be taken into account that, in certain cases, some care that invoices enter the education category and not general expenses.
Find out what to do to ensure you’re not missing out on the opportunity to deduct all education expenses at your next IRS.
How much can you deduct on education expenses?
Knowing how to correctly deduct education expenses from the IRS is important because the more invoices you have, the less tax you will pay.
can deduce “30% of the amount paid for training and education expenses by any member of the household, with the global limit of 800 euros”. Which in practice means that, in order to reach this limit, you have to present expenses above 2,500 euros, since only 30% of what is actually spent can be deducted.
However, the expenses don’t necessarily have to be your children’s. If one of the parents is studying or training, for example, you can also deduct these costs.
Furthermore, if the student is displaced more than 50km from the household’s residence, Household rent expenses can also be deducted with the IRS up to a limit of 300 euros per year. In this case, the global limit of 800 euros can reach 1,000 euros, provided that the difference is related to rents.
If student attends a school in the interior of the country or the Autonomous Regions, regardless of whether you are displaced or not, the amount paid for education expenses is increased by 10 percentage points, with the global limit of one thousand euros per annum.
What education expenses can be deducted from the IRS?
The list of education and training expenses, as provided for in article 78.º-D of the IRS Codeincludes:
- School manuals and books;
- Meals in school canteens;
- Room or house rent when the student is away from home;
- Private explanations;
- Payment of crèches, kindergartens, lactarios, schools, teaching establishments and other educational services.
Also included are Higher education enrollment fees, tuition fees, and tuition fees (including masters and doctorates), public or private, as long as they are part of the National Education System.
In the case of education services such as teaching languages, music, singing or theatre, expenses are also deductible, provided that the service is provided by educational establishments integrated in the national education system or recognized by the competent ministries.
Explanations and expenses with nannies also count if supported by a receipt.
Pay attention to the following:
So that all these charges can be considered education and training, and deducted from the IRS collection, they must be exempt from VAT or taxed at a minimum rate of 6% and which appear on invoices or receipts communicated to the Tax and Customs Authority (AT).
Educational entities that do not issue an invoice because they are exempt from this obligation (such as public universities) must notify the AT of the amount paid by the taxpayer.
Another requirement is that whoever issues the invoice or receipt is covered by one of the following codes of the Classification of Economic Activity (CAE) or fits into one of the equivalent activities provided for in the table referred to in the Article 151 of the IRS Code (CIRS):
- Section P, Class 85: Education;
- Section G, class 47610: Retail sale of books in specialized stores;
- Section G, class 88910: Child care activities, without accommodation;
- Section L, class 68200: Leasing of real estate;
- 8010: Explainers;
- 8011: Trainers;
- 8012: Teachers ;
- 1312: Nurses.
What expenses are not considered education?
Even if related to the education and training of your children (or yours), not all expenses can be deducted from IRS collection in this expense category. It is the case of goods and services paying VAT at 23%.
In order to be deducted as education and training expenses, goods and services must be exempt from VAT or subject to the reduced rate of 6%.
Thus, expenses with education and training are excluded from:
- School supplies such as pencils, pens and notebooks, when purchased from bookstores or supermarkets. If purchased from the school bookstore, it may be deducted;
- Computer and electronic material (such as tablets, computers, printers, etc.);
- Musical instruments and other specific materials for certain courses;
- Clothes and footwear for the practice of physical education.
What to keep in mind so you don’t miss any deductions
The first step, valid for any expense that you want to deduct, is to have an invoice or receipt with the NIF of one of the members of the household. It can be that of the student or one of the parents.
Afterwards, and when the time comes to prepare the declaration, you must be aware of the deadlines for checking invoices and complaining if something is not right.
The validation of invoices does not have to be done only when filling in the declaration. You can periodically go to e-invoice and check that all your expenses have been communicated.
Now let’s see how to proceed with each type of expense.
If you buy textbooks in a supermarket, it’s best to ask for an invoice for just that expense. Thus, when it appears in the E-Fatura, you can identify it and associate it with education expenses. As the CAE for supermarkets is not for the retail sale of books in specialized establishments – such as bookstores – it will be up to the consumer to say which expense category he wants to insert these invoices into.
And it is always more advantageous to include it in education, since the limit value for general and family expenses (250 euros per person, which corresponds to invoices worth 715 euros) runs out quickly.
In principle, these expenses are not considered as education expenses by the IRS. This is because school supplies have a 23% VAT rate and, for education expenses, only goods count exempt from VAT or taxed at 6%.
The solution is to buy what you can at the school itself, since the VAT rate is lower in stationery stores at educational establishments. If you choose to purchase outside of school, invoices can be included in general and family expenses.
In the case of school meals, the requirement for them to be considered education expenses is not the VAT rate, but the company providing them.
Thus, invoices issued by a service provider providing school meals may be deducted from the IRS. That is, you can deduct the canteen invoices from the IRS, but the same is not valid if the meal is eaten in the cafe in front of the school.
Tuition fees are IRS-deductible education expenses, but in this case it is not worth looking for them on the E-Fatura. This is because these expenses are communicated directly to AT, so they only appear later, already inserted in the correct category.
So, when they are available – which usually happens at the end of February or March – you just have to check that everything is right.
Education expenses abroad
Education expenses incurred abroad are also considered in terms of IRS, as long as they are entered in the Finance Portal.
To do this, in the option “Register Invoices Issued Abroad”, you must indicate the essential data of the invoice or equivalent document, such as the country, the invoice number, the date of issue and the amount.
However, the AT has the prerogative to request the presentation of these proofs, for four years, so it is advisable to keep them during that period.
Income from displaced students
Education expenses to be included in the IRS also include the income of displaced students, which can be deducted by 30% up to a maximum of 300 euros per year.
In this situation, instead of the usual 800 euros for education, households can deduct a maximum limit of 1000 euros, provided that the difference relates to rents.
But for a student to be considered displaced, there are certain requirements to meet. You cannot be more than 25 years old and must attend a school integrated in the national education system more than 50 km from the household’s permanent residence.
The lease or sublease agreement must be signed as a Displaced Student and an electronic income receipt or an invoice-income receipt must also be issued.
When the landlord issues electronic rent receipts on the Finance Portal, the taxpayer must select the respective contract through the option “register displaced student”, in the area relating to the lease. Afterwards, just associate this expense in the e-invoice as an education expense.
On the other hand, if the lease agreement was not entered into on behalf of the dependent, as he is a minor, at the time of delivery of the IRS declaration, it will be necessary to fill in Annex H of Model 3, with the remaining deductions from the collection.
If students attend schools in the interior of the country or in the Autonomous Regions, the amount supported with education and training expenses that can be deducted from tax is increased by 10 percentage points.
Article originally published in July 2019. Last updated in January 2023.